The Securities Commission granted exemptive relief to an exchange-traded fund (ETF) from certain provisions of National Instrument 81-102 Investment Funds (NI 81-102) and related securities legislation. This decision allows the ETF to accept digital assets, specifically bitcoin and ether, as subscription proceeds for units of the fund, known as Creation Units. Additionally, the ETF is permitted to engage in transactions involving Crypto Contracts with Fidelity Clearing Canada ULC (FCC), an entity affiliated with the ETF’s manager.
The key conditions of the relief include:
1. Digital assets used for subscription must be acquired from a regulated exchange or counterparty and delivered directly to the ETF’s digital wallet at its custodian.
2. Any Crypto Contract transactions must align with the ETF’s investment objectives and be approved by the ETF’s independent review committee (IRC) in accordance with National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107).
3. The ETF must not pay or receive any consideration for the Crypto Contracts beyond the purchase or sale price of the digital asset and execution costs.
4. The ETF must maintain written records of each Crypto Contract transaction for five years.
The decision was made under the authority of the Securities Act (Ontario), National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, and other applicable securities legislation. The relief is subject to the ETF adhering to the specified conditions to ensure investor protection and is not considered prejudicial to the public interest.